Guam legislator seeks changes to Jones Act

Tuesday, April 10, 2012

A legislator in Guam introduced a resolution Res.(371-31) last week requesting Guam’s delegate to the U.S. House of Representatives to introduce legislation to exempt Puerto Rico, Hawaii, and Alaska as well as Guam from the U.S.-build provision of the Jones Act.
The resolution notes that ships serving Guam are already exempt from the build-American requirement, "but since it only makes sense for shippers bringing goods here to first stop in Hawaii, the exemption is useless - unless it is extended to all the other noncontiguous parts of the United States as well."
Guam's Sen. Frank F. Blas Jr. said the current exemption from the U.S.-build requirement that Guam enjoys "has very little effect on our shipping costs because other non-contiguous U.S. ports that shippers would need to connect thru to make a shipping route sustainable are subject to all the restrictions.”
Blas said he would preserve the requirement that the ships be registered in the United States and owned and crewed by Americans.
Some businessmen and legislators have complained about the Jones Act in Hawaii and Puerto Rico. The Government Accountability Office is currently conducting a study on the Jones Act's impact on the Puerto Rico economy at the request of its congressional representative, Pedro Pierluissi.
Blas said in a press release that while gathering information for the resolution, he received details about increased costs for containers arriving from the United States that merchants have had no choice but to pass on to their consumers.
“I recognize that the increasing cost of fuel has played a role in the rising costs we are seeing on the store shelves. But at the same time, if shipping companies who are doing business or want to do business in our region can acquire larger and more fuel efficient ships to replace their aging fleet at a substantially reduced cost, those savings can be passed on to merchants, who in turn can lower their prices for their customers.”
In 2007, Horizon Lines started a new service between the U.S. West Coast, Guam and China using five containerships it chartered from Ship Finance International that were built in South Korea. Originally Horizon used the ships on its westbound leg to move cargo from the U.S. mainland to Guam and chartered space from China to the United States to Maersk.
When Maersk ended its space charter in 2010, the Danish line started its own service from China, but a year later ended it as freight rates crashed in the Asia-U.S. trade. Horizon also noted expected growth in Guam cargo had not materialized and laid up the SFI ships. Today the carrier announced a deal to return them to the company.
Blas said if the resolution is passed by the Guam Legislature, copies will be sent to the members of Congress who represent Guam, Puerto Rico, Hawaii, Alaska, and the Commonwealth of the Northern Mariana Islands, as well as Sen. John McCain, who in 2010, introduced a measure that would have exempted the non-contiguous states and territories from the Jones Act. He said the resolution would also be sent to the general manager and board members of the Port Authority of Guam, and the island's governor.
Blas's resolution calls the Jones Act "a vestige of the post-World War I years, when the vulnerability of U.S. shipping to German U-boats was still in the public's mind."
The Guam proposal met a negative reception from lobbyists for the Jones Act shipping and shipbuilding industries.
American Maritime Partnership, a trade association for Jones Act operators, told American Shipper that it "strongly supports the build requirement, which, like the Jones Act itself, has provided important economic, national and homeland security benefits in the non-contiguous areas and throughout the U.S. Guam, of course, is not subject to the build requirement."
Matt Paxton, president of the Shipbuilders Council of America, said "efforts to undermine the Jones Act do have a chilling effect on the shipbuilding markets in the U.S."
He contended the Jones Act "works as a national security and homeland security law and a law that ensures an important, critical shipyard industrial base that keeps a robust supplier industrial base alive. That commercial shipbuilding base is absolutely critical for the defense shipyard industrial base that we also represent... We need a thriving commercial shipbuilding sector to maintain a healthy supplier market so we can have the state of the art Navy that we have and Coast Guard." — Chris Dupin